U.S. Shipping Delays Are Worsening. Closeouts Are Brewing.

As cargo delays continue to get worse, more and more containers are either still out at sea or are arriving late. Liquidators are already gearing up for all the 4th quarter inventory that companies will have to get rid of because it wasn't hear in time to get to retailers shelves. Closeouts are always a byproduct of too much inventory on hand and that is precisely the problem currently brewing. There will likely be a need to sell excess inventory in coming months as Christmas goods arrive much too late to do anything with.

The pandemic brought with it many unintended consequences. With the lockdowns, consumers were forced to stay at home and save money. When things began opening last year, the consumer demand was so strong importers couldn't bring in goods fast enough, and ports couldn't handle all the freight. Liquidators and other wholesalers selling closeouts and overstock merchandise were equally busy. There was unprecedented demand for inventory already warehoused here in the United States and this has lead to huge delays and price increases of inter-modal and over-the-road shipments.

Shipping delays are widespread and commonplace for any kind of importer, closeout buyer, distributor and all companies that sell excess inventory. The demand for goods simply outpaces the resources to move them; whether that be import containers or over-the-road trucks. Ports both in China and the U.S. are still reeling from lack of employees including dock workers and warehouse people. Even in the U.S. for companies in overstock situations that want to get rid of inventory, there aren't enough people to pack orders and load trucks. No matter which way you turn there is not enough help.

There is a bottleneck and this is creating future closeouts. Late shipments that can't go out to retailers, inventory that is too expensive, products that have a specific need today but won't be in demand by the time they finally get here, etc. There are all kinds of reasons closeouts are brewing, but we are setting up for a situation where companies will need to get rid of inventory almost as soon as they receive it.

On the one had, it's hard to understand how there can be an overstock situation based on current conditions in this environment. But on the other hand companies will need to sell excess inventory because when it finally gets here, they will no longer have a need for it. Liquidators of home décor, toys, seasonal goods and lawn and garden are already anticipating large amounts of excess inventory being released into the market at the end of 2021 and into 2022.

Unresolved snags, and the emergence of new problems including the Delta variant, mean shoppers are likely to face higher prices and fewer choices this holiday season. Many retailers including REI have roped off sections of the store and put in place signage explaining why shelves are so bare. Companies such as Adidas, Crocs and Hasbro are already warning of disruptions as they prepare for the crucial year-end period.

"The pressures on global supply chains have not eased, and we do not expect them to any time soon," said Bob Biesterfeld, the CEO of C.H. Robinson, one of the world's largest logistics firms. "Name almost anything and it seems like there's a shortage of it somewhere," Biesterfeld added. "Retailers are struggling to replenish inventory as fast as they're selling, let alone prepare for holiday demand."

Discount retailers and closeout websites will likely look to domestic vendor partners for inventory as the global supply chain continues to experience long delays.